Minnesota's China ties grow deeper

  • Article by: KEVIN DIAZ , Star Tribune
  • Updated: August 25, 2013 - 4:13 PM

The state’s deep roots there help in competing for vast, emerging market.

– Nestled on the fourth floor of a gleaming office tower here is the home base of Ning Shao, Minnesota’s man in China. There is an American-style Starbucks in the lobby and American-style competition from a half-dozen of the representatives of 40 other states all looking to grab a piece of China’s massive market.

China’s economy may be slowing, but its rate of growth is still far faster than that of the United States, making it a powerful draw for companies.

Shao, who opened Minnesota’s Shanghai office last year after Gov. Mark Dayton led a trade mission here, estimates that at least 100 substantial Minnesota firms are jockeying for business in what is now the world’s second-largest economy. That includes everything from food giants Cargill and General Mills to Lake Region Medical, which sells medical guide wires in China.

The Communist Party still controls China, but the nation’s increasingly wealthy middle class is developing an appetite for Western-style food, consumer products and ideas. Its earlier views of free markets notwithstanding, the country’s leaders say China is open for business — albeit with distinct Chinese characteristics.

“They’re the best capitalists in the world, within a certain framework,” says Twin Cities native John Evans, managing director of Tractus Asia in Shanghai, which helps clients find business opportunities throughout China and the rest of Asia.

Shanghai’s Manhattan-scale skyline, much of it built up in the last 20 years, belies this nation’s Communist roots. It is a city of posh spas, cutting-edge restaurants, five-star hotels and traffic-clogged streets. It also is a city on the precipice, embracing capitalism, but still leery of Western-style democracy.

The party, which controls the government, is invisibly present beneath layers of bureaucracy. It’s the Wild West of Wall Street with censorship. Facebook and Twitter are not allowed. Their Chinese equivalents are closely monitored.

What that leaves in the wake of the rigid ideology that once permeated this country remains unclear. Absent any real political guide star, the money chase is on. And so is the pressure on party leaders, who now see national pride, stability and prosperity as the main pillars of their legitimacy. Especially prosperity.

A taste for pork

Enter the foreign investors, the Wal-Marts, the GM plants and even the farmers from Minnesota, like Tom Haag.

Haag can always use a few more customers, and China has about 1.3 billion of them.

So it was little wonder that the Eden Valley farmer accompanied Dayton last year to the world’s most populous nation — and Minnesota’s second-biggest trading partner — for a closer look.

“Fruits and vegetables are still popular,” Haag observed, “but they’ve got a taste for westernized pork.”

Downtown Beijing combines modest shopkeepers and monuments to the heroes of the socialist revolution alongside showrooms for the cream of capitalist vendors: Rolex, Chanel and Ferrari.

State-owned enterprises command four-fifths of China’s bank loans, while 70 percent of new jobs are derived from private enterprise.

Amid an otherwise stagnant global economy, the allure of China is driving a frenzy of new interest and fresh competition among U.S. regions and business entities for a piece of an economy that produces frowns because the growth of its gross domestic product has slowed to a still-breathtaking 7.5 percent.

“It’s very market-oriented,” said U.S. Rep. Erik Paulsen, a Minnesota Republican who has made the trek to China, “but there are still a lot of central controls from the government.”

Near the front of that pack — ranked 17th in China exports — is Minnesota, whose ties trace back to James J. Hill, the 19th-century railroad magnate who completed a rail link to the West Coast as a way to spark trade opportunities with China.

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  • China milestones

    Modern China: From colonialism to communism to capitalism

    1842: Qing Dynasty capitulates to Great Britain in the Treaty of Nanjing, ending the First Opium War and commencing a century of foreign colonial domination of China.

    1911: Xinhai Revolution ends 2,000 years of imperial rule and marks the beginning of the Chinese Republican era under Sun Yat-sen.

    1921: Chinese Communist Party is founded.

    1937: Japan invades China.

    1949: After civil war with Chinese nationalists, Mao Zedong declares the founding of the People’s Republic of China, commencing 64 years of continuous Communist Party rule. Nationalists repair to Taiwan.

    1972: President Richard Nixon visits China.

    1978: Deng Xiaoping assumes power and initiates economic reforms.

    1989: Tiananmen Square protests take place.

    1991: First McDonald’s opens in Beijing.

    2008: Summer Olympics are held in Beijing.

    2013: Xi Jinping assumes power.

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